AIG to sue BofA on mortgage bond losses

WASHINGTON – Aug. 9, 2011 – Investment giant AIG said it will sue Bank of America to recoup more than $10 billion in losses on $28 billion of investments in mortgage-backed securities.

People knowledgeable about the complaint said the American International Group alleges that Bank of America, along with its Merrill Lynch and Countrywide Financial units, misrepresented the quality of the mortgages bundled in securities and sold to investors, The New York Times reported Monday.

Observers said it could be the largest mortgage securities-related action filed by a single investor.

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